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Technology Stocks : Ampex Corporation (AEXCA) -- Ignore unavailable to you. Want to Upgrade?

To: Michael Olds who wrote (7460)	4/18/1999 2:38:00 AM
From: Carl R.	Read Replies (2) \| Respond to of 17679

Michael, I certainly agree that if there is no IPO the price of AXC will quickly fall back to the $3 range, unless of course your "financial backer" comes in and buys say another 50 million shares at $6. The reason the stock would fall is only partly be because of hopes of an IPO; the main reason is that Ampex doesn't have enough money to go it alone. A big financial backer would give Ampex enough clout to play with the big boys for awhile, but without that, they need to do an IPO. If they did get a financial backer for AXC, they'll still need to figure out how to get the money to TVOW, who will probably burn through about $40 million this year setting up its global operation. Don't get me wrong. TVOW needs to burn through that money. They need to act fast. They need to set up a global operation. But those things cost money, and they don't have the revenue stream to support that kind of growth just yet. They got $4 million from Ampex already, and I suspect most of that is gone. Ampex will soon buy another 31% for probably $6 million or so, and that will last a couple more months. What then? The easy answer is an IPO. If you need to do one in the next several months anyway, you don't want to wait until you are nearly out of money and have a gun to your head, so you do it now. Yes, Ampex could loan them another $10-20 million or so to last them until the end of the year, but if they do that without placing additional AXC stock, then AXC's financials will start looking a bit depleted. Don't forget that AXC itself will need money, too, to support all those production facilities and the in-house operation. The only reasonable and safe alternative is to arrange now for the money TVOW will need to be competitive. An IPO would do it and is probably the easiest and most logical approach, but you are correct, there are other ways. But do keep in mind that if AXC elects to do a private placement of AXC stock, that dilutes your interest in TVOW. Carl